Old Media, New Tricks

Radio and Outdoor Companies Turn to Online Auction System to Sell Digital Ads

By

Suzanne Vranica

Updated April 28, 2013 9:51 p.m. ET

Buying ad space on the video screens inside the Clark/Lake train station in Chicago typically involves making half a dozen phone calls and exchanging several emails or faxes with the firm that owns the screens.

Now, advertisers can accomplish the same task with a few clicks of a computer mouse, thanks to a new auction system for buying digital out-of-home ads.

Such automated auctions already are used for Web display ads, but "programmatic buying," as it is called, is now attracting the attention of the digital arms of old media such as outdoor and radio. With programmatic buying, which can often be done in real time, advertisers can log on to a website and select where they want ads to run, how long the campaign is to appear and their maximum bid for the space. With another click the technology begins bidding on ad space that matches the request.

ENLARGE

Ads at this Chicago train station were sold via Vistar's auction system.
Titan

The outdoor-ad auction system is run by Vistar Media, which launched the exchange in January.

Vistar is busy forging relationships with companies that operate digital screens in stores, malls, elevators and other public venues. Among them is Titan LLC, a closely held New York outdoor-ad company that owns video screens in Philadelphia, Boston and Chicago (including the ones in the Clark/ Lake station). Titan is using Vistar's exchange to sell ad space on about 500 of its 1,700 video screens, with more screens coming online later in the year.

Vistar is also working with Adspace Network, a New York company that operates 3,000 screens in 206 malls in the U.S.

So far about a dozen advertisers have used Vistar to buy ad space, says Jeremy Ozen, a co-founder of Vistar, which was founded by former executives of Invite Media. Invite Media was acquired by Google Inc. in 2010. Vistar backers include Valhalla Partners and Advancit Capital, the investment firm co-owned by Shari Redstone. Advertisers include Zurich Insurance Group, Zurich confirms.

For advertisers, the technology takes a lot of the legwork out of buying ad space, particularly across screens owned by multiple firms, said Mike Finnegan, director of product development at Xaxis, an online media-buying platform owned by WPP PLC.

For Titan, making its inventory available through an exchange allows it to reach ad buyers who control digital budgets in addition to buyers confined to outdoor, said Dave Etherington, Titan's executive vice president of marketing. Digital is a bigger pool of revenue: spending on Internet ads is expected to jump almost 18% this year to $36.2 billion while ad expenditures on outdoor ads is expected to rise about 5% to $7.9 billion, according to ZenithOptimedia, a unit of Publicis Groupe S.A.

Bigger outdoor ad companies are beginning to take note. Clear Channel Outdoor Holdings Inc., one of the biggest outdoor companies in the world, has had some exploratory conversations about the use of programmatic buying, according to a person familiar with the matter. "We are always looking for ways to make it simpler to put together an out-of-home campaign," said William Eccleshare, the company's chief executive officer.

Radio is also tuning in. Triton Digital, a Los Angeles-based company, has recently built an ad exchange that allows advertisers to automate the buying of online and mobile-audio radio ads. Its sells some inventory for media companies such as CBS Radio, which streams content on the Web from many of their local stations.

Triton said it has already run ad campaign for a "handful" of advertisers but it declined to provide specific names.

Eventually, automated ad sales could bring down the price of ads, as an auction system lets bidders set their price. Programmatic buying has brought down prices in the ad market for online display ad, but there is a glut of available space there. The world of digital outdoor ads is finite, unlike online ads. Moreover, companies such as Titan are including rules on the exchange, which will block any bids that fall below a certain price.

Dennis Roche, president of Access Sports Media, which operates screens hanging in the concourse of 47 professional sports arenas, said he is willing to risk some pricing erosion to get more dollars from ad categories that wouldn't necessarily buy space on his firm's screens.

"I am focused on dollar share in the beginning, not" pricing, said Mr. Roche, whose firm recently began working with Vistar.

Some brand marketers such as Unilever and Kellogg Co. are beginning to embrace real-time bidding for some of their display ad buys while others such as Reckitt Benckiser are using it for online video.

Real-time bidding for online display is more efficient from a pricing standpoint, said Bob Arnold, Kellogg's associate director of digital strategy.

The outdoor ad business doesn't offer the same type of audience-targeting capabilities as online display. But WPP's Spafax Networks has developed a system that works with Vistar, offering advertisers some ability to target specific categories of consumers. It uses survey data and other research information to figure out when certain demographic groups, such as business travelers, might pass by a particular screen—such as at an airport, in a cab, or in an elevator—during the course of their day, says Patrick Bonomo, Spafax's chief operating officer. With that information, the agency can select specific venues such as a train station in specific ZIP codes to reach those travelers at multiple places.

Still, advertisers have concerns about automated ad exchanges, including how certain they are about where their ads are appearing. Bigger and more elaborate ad deals—like home page takeovers or sponsorship—will still involve lots of back and forth between human sales forces.

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